BMW eyes pos­si­ble elec­tric ve­hi­cle joint ven­ture in China

Business World - - WORLD BUSINESS -

SHANG­HAI/BEIJING — Ger­man lux­ury au­tomaker BMW is look­ing to form a joint ven­ture with Great Wall Mo­tor in China, which could fo­cus on elec­tric ve­hi­cles, ac­cord­ing to two sources fa­mil­iar with the mat­ter on Wed­nes­day.

A ven­ture with Great Wall, whose HongKong listed shares leapt 20% on the news, would be BMW’s sec­ond in the world’s largest auto mar­ket, where for­eign car mak­ers have to team up with lo­cal part­ners.

“We are in dis­cus­sions with Great Wall about set­ting up a joint ven­ture to pro­duce cars in Chang­shu,” said a BMW ex­ec­u­tive, who was not au­tho­rized to speak on the mat­ter and de­clined to be iden­ti­fied.

An­other per­son fa­mil­iar with the mat­ter said the new joint ven­ture in the eastern city of Chang­shu would not deal with gaso­line or diesel pow­ered cars, in­di­cat­ing a fo­cus on elec­tric ve­hi­cles was likely.

BMW’s China sales grew 11.3% last year. It is the coun­try’s sec­ond-largest pre­mium brand after Volk­swa­gen AG’s Audi AG. BMW is try­ing to stay ahead of third-place Daim­ler’s Mercedes-Benz, which recorded 26.6% growth in China sales in 2016 thanks to a fresher model lineup.

Car man­u­fac­tur­ers have re­cently an­nounced a raft of in­vest­ments and tie-ups in China.

Tesla, Ford Mo­tor Co., Daim­ler AG, and Gen­eral Mo­tors are among those that have al­ready an­nounced plans for mak­ing elec­tric ve­hi­cles in China.


BMW and ri­val Mercedes are bet­ting they can mass pro­duce new elec­tric cars based on con­ven­tional ve­hi­cle de­sign, de­fy­ing scep­tics who say they will need more rad­i­cal plans to head off the threat from Tesla and other start-ups.

Bern­stein an­a­lysts said they be­lieved that any new ven­ture of BMW and Great Wall would have to sell ex­clu­sively elec­tric ve­hi­cles (EVs), given China’s mora­to­rium on approvals for new gaso­line car busi­nesses.

“If an agree­ment were to be reached, we’d ex­pect an ar­range­ment like Denza (MercedesBYD), or VW-JAC, Ford-Zo­tye to be the most plau­si­ble out­come, whereby a new brand is used to sell EVs,” they said in a note, adding that the ve­hi­cles could be sold un­der the Mini brand.

China wants elec­tric and hy­brid cars to make up at least a fifth of the coun­try’s auto sales by 2025 and plans to loosen joint ven­ture reg­u­la­tions to achieve its aim.

BMW al­ready has a joint ven­ture in China with lo­cal car maker Bril­liance China Au­to­mo­tive Hold­ings and pro­duces cars at two plants in Shenyang. Shares in Bril­liance fell on Wed­nes­day.

“Our busi­ness devel­op­ment with the joint ven­ture BMW Bril­liance Au­to­mo­tive will con­tinue as planned, and we will carry on to in­vest and de­velop our joint ven­ture,” a spokesman for BMW said, de­clin­ing to com­ment on any new joint ven­ture.

The plans were first re­ported by Shang­haibased www.iau­to­ ear­lier on Wed­nes­day.

“I don’t know how far along we have gone nail­ing this deal,” or whether the two com­pa­nies have of­fi­cial cen­tral govern­ment ap­proval for the ven­ture, the BMW ex­ec­u­tive said. A Great Wall of­fi­cial de­clined to com­ment. Great Wall, which in Au­gust ex­pressed an in­ter­est in the Jeep brand of Ital­ian-Amer­i­can au­tomaker Fiat Chrysler Au­to­mo­biles NV’s, is one of China’s largest car mak­ers.

Last month it struck a deal to se­cure sup­plies of lithium, a min­eral key for de­vel­op­ing elec­tric ve­hi­cles.

The firm’s shares soared as much as 19.2% to their high­est level in over two years, be­fore par­ing some gains to stand up 14% in af­ter­noon trade. Its Shang­hai-listed shares were sus­pended from trad­ing, pend­ing an an­nounce­ment.

Bril­liance China Au­to­mo­tive’s shares were down 2.76%.

Bro­ker­age Jef­feries said in a note that it was “un­der­stand­able that BMW needs a new part­ner to de­fend its mar­ket share in a more com­pet­i­tive mar­ket,” and ex­pected that the move would hit cur­rent part­ner Bril­liance. —

A MAN takes a look at sec­ond­hand BMW cars at a dealer shop in Beijing, China, Sept. 11, 2015.

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